Home Cards Difference between BNPL or Fintech Cards and Credit cards

Difference between BNPL or Fintech Cards and Credit cards

by BankingTricks Desk

Until recently, buy now, pay later meant making purchases using a credit card. However, in recent years, we’ve seen banks, e-commerce corporations, and even fintech organizations offer Buy Now, Pay Later schemes to customers. The BNPL is a financing solution that allows customers to make purchases and pay for them later with no interest.

They are not issued by commercial banks, unlike traditional credit cards. Although some NBFCs issue credit cards, they usually do so in collaboration with a bank. Today we will understand the difference between these two.

How different are BNPL cards from credit cards?

If we see, the majority of these virtual cards fintech or BNPL cards are not traditional credit cards. They achieve the same purpose by providing a credit line. They provide a virtual card that can be used to access the credit line. After a few days, a physical card is mailed to the address provided on the form. Even while these cards can be applied for without a credit score, that does not mean that someone with a low CIBIL score can easily obtain one.

Let’s go through the basics of a credit card before going into the benefits of these cards. A credit card can be used to make a purchase or pay a bill, and the cardholder has 45 days to make the payment. BNPL cards, on the other hand, have varying paying cycles ranging from 10 days to 90 days.

Because they aren’t regular credit cards, you can’t use them with apps like Cred, a credit card bill payment network that helps people pay their payments on time.

To get one of these cards, all you have to do is download the app and follow the instructions. You will be able to obtain the virtual card in due time. The virtual card is sent right away, while the real card takes a few days to arrive.

Read more: RBI issues new rules for credit and debit cards, imposes new penalties

These cards, like all credit cards, provide cashback. However, cardholders should be warned that these cards do not include normal credit card capabilities such as cash withdrawal and foreign payments, or reward or loyalty points.

Whatever you spend using such cards online or offline appears on your credit report as a consumer loan. Missed payments will have the same effect on your CIBIL score as missed credit card payments.

As a result, any potential user should proceed with caution and conduct comprehensive research before applying for one of these fintech cards that provide credit lines to clients with no credit history.

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